Last Updated May 7, 2010 6:45 AM EDT
Yesterday, the feds indefinitely halted plans to hold an oil and gas lease sale off the shore of Virginia and canceled a series of public meetings scheduled for this month -- a crucial step before companies can submit bids. This is meant to be a temporary delay. The Interior Department wants to investigate offshore drilling safety and is still dealing with the oil spill, which was triggered after Transocean's (RIG) Deepwater Horizon rig exploded and subsequently sank. BP, which was leasing the Transocean rig, has been scrambling to stop a leak from its well deep under water ever since.
McDonnell had supported the safety review, but that was before the Interior formally suspended plans for the Virginia lease sale. Virginia's offshore drilling dreams could be scuttled for good as the Gulf of Mexico oil spill continues and especially if it hits shore.
The lease sale offshore Virginia would have marked the beginning of a new era of drilling in the Atlantic, waters where oil and gas development has been banned for decades. Whether oil companies would even bother bidding on the area is another question. The area, located about 50 miles offshore, was off limits until September 2008 when a moratorium on drilling there expired. When President Obama announced his plan this spring to expand offshore drilling, oil companies cheered the move. Exxon (XOM) has said opening the area offshore Virginia was a "meaningful, potential opening" to more U.S. energy production. But that doesn't mean the company will bother investing in the area.
The Interior Department's Mineral Management Service estimates that area may contain 130 million barrels of oil and 1.14 trillion cubic feet of natural gas. That may seem like a boatload. But compared to what the U.S. consumes in a year -- about 18.7 million barrels of oil per day in 2009, according to the Energy Information Administration -- it's a drop in the bucket. It's also dwarfed by the estimated 3.5 billion barrels of oil in the eastern Gulf of Mexico, another area that was included in President Obama's expanded drilling plan.
Photo of Transocean's Deepwater Horizon rig from the U.S. Coast Guard See additional coverage of Virginia's offshore drilling and the Gulf of Mexico oil spill:
- Mixed Messages: Virginia's Offshore Drilling Drama
- Seven Technologies Used to Clean the Gulf Oil Spill
- Gulf Oil Spill: One More Way to Kill a Climate Bill
- Gulf Oil Spill Picture Gallery: The Last Four Minutes of the Deepwater Horizon (Exclusive)
- Gulf Oil Spill: Who's to Blame? BP, Halliburton and the Feds Are All Implicated
- Peak Oil Era: Why the Cost and Risk of Oil Exploration Will Keep Rising